FEATURE-Revenge of the internal combustion engine

Tue Nov 15, 2011 11:11am EST

* Gas-powered Cruze outsells plug-in Volt 200-to-1

* Avg fuel economy on new cars up 2.5 mpg over four years

* 40-mpg+ gas-powered models in U.S. rising sharply

By Ben Klayman

ANN ARBOR, Mich, Nov 15 (Reuters) - At the Chevrolet dealership here, customers want to see and touch the Volt, the gasoline-electric hybrid hailed by enthusiasts as the kind of innovation that could secure the future of General Motors.

But they usually kick the Volt's tires and move on, often to a Cruze. The compact Chevy gets up to 42 miles per gallon, and you can buy two of them for the cost of one $40,000 Volt.

Call it the revenge of the internal combustion engine.

Major automakers and the Obama administration have bet heavily on hybrids and pure electric vehicles. But new and more efficient gas engines are winning on the showroom floor, an inconvenient truth that could slow the acceptance of electric cars.

"They come in to look at a Cruze. They drive a Volt. They go back to the Cruze. It really helps us with sales of the Cruze," said Michael Mosser, general manager of Suburban Chevrolet of Ann Arbor.

The plug-in Volt has become General Motors Co's high-mileage halo car. But the hybrid has also been outsold by its simpler sibling by 200 to 1. Globally, GM has sold about 5,000 Volts versus 1 million Cruzes.

"It's naive to think that the world is going to switch tomorrow to EVs," said Larry Nitz, GM's executive director for vehicle electrification.

Meanwhile, new cars with traditional engines are showing striking fuel efficiency gains thanks to technologies such as turbochargers, direct injection, and engines that shut down when the vehicle stops, then spring back to life when the driver presses the accelerator.

Turbochargers compress the air flowing into engines, allowing more fuel into the cylinders, while direct injection provides improved delivery of the fuel needed in each engine cylinder so it burns cleaner and more efficiently.

The average fuel economy for new vehicles is now 2.5 more miles per gallon than four years ago. And emissions of greenhouse gases per new car are down 14 percent since late 2007, according to the University of Michigan Transportation Research Institute.

At the same time, the number of gas-powered models in U.S. dealer showrooms boasting 40 miles per gallon or better in highway driving has tripled in the last five years.

That has made winners of cars like the Cruze, Ford Motor Co's Focus and Hyundai Motor Co's Elantra.

Every automaker is focused on improving fuel efficiency, including BMW , which just reintroduced a four-cylinder engine in the U.S. market for the first time in a dozen years, and Honda Motor Co Ltd , which offers a 41-mpg automatic version of its 2012 Civic.

Increased fuel efficiency also has put pressure on battery makers and possibly the U.S. Department of Energy, which has used $2.5 billion of taxpayer money to help pay for the development of electric car technology.

Having watched rival Toyota Motor Corp seize the mantle as the world's greenest automaker with its Prius hybrid, GM says it plans to push its advantage with the rechargeable Volt and hopes consumer preferences catch up.

Estimates vary on how fast consumers will accept electric vehicles. At the bullish extreme, Nissan Motor Co Ltd , which sells the all-electric Leaf car, is forecasting that EVs will make up 10 percent of global sales by 2020, compared with virtually nothing now.

But GM and other automakers are also looking to boost the performance of the gas engine.

"You've reached the maximum return in the internal combustion engine," said Mark Perry, director of product planning for Nissan Americas. "Just the pure physics, there's a limit."

Even so, most automakers believe no single approach will solve the fuel economy problem. "There is no silver bullet answer," Perry said. "It's more like silver buckshot."

'JUST THE LITTLE TOE' IN THE WATER

One major incentive driving fuel-economy gains is the new federal requirement that an automaker's fleet average 54.5 miles per gallon by 2025.

Ford offers its Ecoboost technology -- a combination of fuel injection and turbocharging aimed at giving smaller gas engines more power and greater efficiency. The No. 2 U.S. automaker also is rolling out a Focus EV.

"Until electric does have the ubiquity of plugging, it's not going to have an appeal to 100 percent of the customers," Ford Chairman Bill Ford said last month. "While that's happening, we want to make our other technologies as fuel-efficient as we possibly can."

Toyota, which will roll out a plug-in version of the Prius next year, remains skeptical of the pure EV push.

"Pure battery electric cars will most likely remain a niche for some time to come," said Bill Reinert, Toyota's U.S. national manager for advanced technology. "The market for these products is nearly all regulatory push, not market pull."

Jack Hollis, head of Toyota's Scion brand, added, "Everyone is really just putting a toe in the water when it comes to EVs. And for most companies it's just the little toe in the water."

Surveys support the view that most consumers do not want to pay extra for electric vehicles. The better fuel economy gets, the less interested in EVs they are.

"At 50 miles per gallon, the majority of consumers around the world lose interest in electric vehicles," said Joe Vitale, head of Deloitte Touche Tohmatsu Ltd's automotive practice

Deloitte found in a survey that global expectations for driving range and charging time for electric vehicles far outpace reality. More than half of respondents were unwilling to pay any price premium for an EV.

Toyota's Reinert said the industry will likely reach the theoretical maximum efficiency on gas engines over the next decade. But with hybrid technology and next-generation biofuels, gasoline engines could get to 95 percent of the benefits offered by EVs, he said.

In the meantime, improvements will come from dozens of small tweaks, like reduced friction and heat loss, and electrification of parts like the oil, water and power steering pumps. Enhanced transmissions, lighter materials -- like stronger steel and alloys -- and more aerodynamic designs also will be key.

"As long as the person driving doesn't feel like the car is struggling, he doesn't care what's under the hood," said David Champion, senior director of Consumer Reports.

Even proponents say consumers will need time to get used to electric cars.

"When people switched from the horse, the gas car solved so many problems," said Chris Paine, whose documentary "Revenge of the Electric Car" looking at EV development at GM, Nissan and Tesla Motors Inc debuted last month.

"What it really was was a new paradigm," added the filmmaker, who five years ago criticized GM in another documentary, "Who Killed the Electric Car?"

"It sometimes takes people a little while to figure out things are changing for the better."

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Comments (3)
chistletoe wrote:
From the day when the price of gasoline hit $4.00/gallon,
americans finally have stopped their increasing thirst for the stuff.
In the last 3 and a half years, gasoline demand in the USA has actually plummeted by over 10%, or a million gallons a day.

Nov 15, 2011 11:35am EST  --  Report as abuse
The headline is a bit silly.

The Volt has been sold nationally since November 1, 2011. That was only 14 days ago. For most of the year, it has been sold in 6 of 50 states.

The factory is still ramping up to get to 5000 units per month.

I would like to ask Mr. Klayman if he was able to gauge demand for the vehicle in terms of sales for the Chevy Volt specifically. Does the Ann Arbor dealer still sell Volts at MSRP (v. discounting)?

My understanding is that so far, demand > supply. Only when demand = supply will we have a true understanding of how big the EV market is.

Nov 15, 2011 12:08pm EST  --  Report as abuse
Carney3 wrote:
Higher MPG is not the solution. From 1976 to 1990 our fleet average went from 13 to 20 but our gasoline consumption went from 89 to 103 billion gallons. Even more importantly, if our consumption DID go down OPEC could just cut production to make the price go high enough so we pay just as much for less oil as we did before for more oil. Domestic drilling won’t help; we have less than 2% of world oil reserves even counting Arctic and offshore while OPEC has more than 78%.

The only way out is to use something other than oil to move. The article does not mention that after tax breaks you pay no more than $32,500 for a Volt and even less in many states.

Nov 15, 2011 12:44pm EST  --  Report as abuse
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